MARKETBEAT

OFFICE SNAPSHOT
ASIA PACIFIC

Q3 2013

A Cushman & Wakefield Research Publication

ECONOMY

SIGNS OF MODERATION
PERSISTED BUT ECONOMY
STILL RESILIENT
Tighter global financial conditions,
weak external and domestic demand
have continued to weigh on the Asia
Pacific economy through the third quarter of 2013.The delay in
quantitative easing withdrawal gives a breather to emerging markets
dealing with weakening currencies and financial markets. China
witnessed a broad-based recovery on the back of revived investment,
consumer spending and factory production. India continued to reel
under pre-election uncertainties and inflationary pressures.
Meanwhile, monetary and fiscal stimulus helped Japan to march on a
recovery path amidst growing concerns that promised structural
reforms will not be implemented next year. Philippines and Singapore,
on the other hand, continued to outperform and buck the slowing
trend in Southeast Asia by withstanding external challenges. Central
banks in India and Indonesia have increased interest rates to battle
inflation and stabilize currencies.

business sentiments. In the meantime, leasing activity remained

healthy in Manila, Singapore and Tokyo due to strengthening economic
conditions and improved business sentiments.
ECONOMIC INDICATORS
GDP GROWTH

2013F

2014F

2015F

Australia

2.4

1.8

2.0

China

7.6

7.0

5.7

Hong Kong

3.3

3.2

1.4

India

4.2

5.4

6.4

Indonesia

5.7

5.5

5.9

Japan

2.0

1.2

0.8

Malaysia

4.4

4.5

4.4

Philippines

7.6

6.4

5.5

Singapore

2.9

2.8

3.2

South Korea

2.7

3.2

2.1

Taiwan

2.8

3.1

0.8

Thailand

3.2

3.5

3.8

Vietnam

5.0

5.1

5.8

OVERVIEW

Source: Roubini Global Economics

LEASING REMAINS MODEST ACROSS ASIA PACIFIC

GRADE A OFFICE VACANCY RATE

The third quarter was marked by a slowdown in leasing activity in the

region. Grade A vacancy rate has remained at 10.5% for all 29 cities
that Cushman & Wakefield tracks in Asia Pacific, almost stable on an
annual basis.Availabilities have increased across most core CBD
markets due to a rise in new supply and falling demand.The average
vacancy levels have inched up to nearly 10% except for Hong Kong,
Singapore and Tokyothe regional financial centers that recorded
vacancies as low as 5%.Vacancies have slightly dropped in emerging
markets, reaching an average of 18% at the end of the third quarter.
Grade A absorption has moderated in the majority of the markets,
particularly in cities in Australia, China and India. Concerns about
economic growth prospects have eroded business confidence in
Australia where the demand for office space in the last six months
has dropped by more than 40% as compared to the second half of
2012. Sydney and Melbourne are hit by consolidations resulting in
backfill space and a rise in sublease space, which in addition to a rise
in supply are pushing up the vacancies. Notably, Grade A vacancies in
Sydney have breached 10% after two years; and in Melbourne, it has
reached the highest rate recorded in 2004. Perth, on the other hand,
seems relatively stable with the paucity of new supply helping to
offset tepid demand due to a slowdown in the resource sector.The
decentralization trend has continued in Beijing and Shanghais CBD
markets, with continued low vacancies and high rents inducing
tenants to explore lower-cost markets. Meanwhile, India remained
under pressure with a growing uncertainty and a significant drop in

GRADE A OFFICE OCCUPANCY COST

NOVEMBER 2013

A Cushman & Wakefield Research Publication

Grade A rents have largely remained stable across the region except
for Singapore, Manila and Ho Chi Minh City. Rents continued to
strengthen in Singapore due to a positive occupier activity and limited
availabilities outside Marina Bay. Stable growth in the BPO sector
continued to fuel office expansions and in turn, pushed the costs
upward in Makatis CBD in Manila.The continued rise in supply led to
large-scale availabilities in Chengdu and Ho Chi Minh City, and a
subsequent correction in rents of nearly 8-10% on an annual basis.
Effective rents in Australia have further moderated due to a rise in
backfill/shadow space as well as new/upcoming supply and subdued
demand. Rents continue to stabilize in Hong Kongs Greater Central,
which remains at the top as the most expensive market at US$150
per square foot per year, followed by Singapore, Beijing and Tokyo.
The overall Grade A new supply during the quarter was nearly 18
million square feet (msf), largely coming from Bengaluru, Chengdu,
Chennai, Manila and Melbourne, bringing up year-to-date completions
to 53 msf.The construction pipeline still remained high at 280 msf
during the end of the third quarter.With large-scale speculative
development noted in growth markets, some locations are already at
a risk of an oversupply. Notably, Ahmedabad, Chennai, Kolkata,
Mumbai, NCR, Pune, Chengdu, Kuala Lumpur, Hanoi and Ho Chi Minh
City currently boast double-digit vacancies.

INVESTMENT ACTIVITY IS STILL HOLDING UP

The volume of office acquisitions during the third quarter dipped 5.8%
to US$9.8 billion, as compared to the same period in 2012, mainly due
to the 19.2% decline in investments in the emerging markets, albeit
sales volume in core markets also dropped by a modest 5.1%.
Nonetheless, year-to-date investment sales totaling US$42.8 billion
remained 14% higher on an annual basis. Investments in Japan, largely
in the form of single-asset acquisitions have more than doubled on an
annual basis, largely supported by a buoyant macro-economic
environment. Portfolio investments driven by REITs that ramped up
acquisitions in the first half-year have started to moderate as the

availability of prime, high-yield assets continues to fall further. Australia

and China have relatively remained stable but other major markets
Hong Kong, Singapore and South Koreawitnessed a major drop in
volumes. Purchase of Shiba Park, a prominent office building in Tokyo
by a group of investors including Asia Pacific Land, Abu Dhabi
Investment Council, Japans Secured Capital Investment Management
Co and C.V. Starr & Co. for US$1,067 million represented the most
significant sale transaction in the region during the quarter.

OUTLOOK

MODERATE ECONOMIC GROWTH TO CONTINUE

BUT STILL SUFFICIENT TO SUSTAIN TRACTION
Going forward, external headwinds will continue to weigh on most
countries in Asia.While the export-oriented economies in the region
should benefit from some recovery in the west, demand will still
remain below its potential. Lower-than-expected growth in exports,
a reduction in investments and relatively weak domestic demand
are expected to continue into 2014. China is shifting gears to lower
growth while restructuring the economy, and India is expected to
continue to post below-trend growth (around 5%) for the remainder
of 2013. However, the momentum created by Abenomics in Japan
should help temper the impact of slower growth in China. Meanwhile,
the Philippines leads the growth momentum in Southeast Asian
economies. Moderate economic growth at 5.0-5.3% at the regional
level should be sufficient to sustain traction in the office market.
Against such a backdrop, we expect leasing activity could moderate
further but still register relatively healthy levels for the rest of the year.
Core CBD markets, excluding some cities in Australia and Seoul, are
expected to remain tight with limited supply and moderate demand
in the short term. On the other hand, speculative construction and
a slowdown in occupier activity would elevate vacancies in emerging
markets such as China, India, Malaysia and Vietnam. Rental rates are
generally expected to remain stable to increasing across the region.

OFFICE SNAPSHOT
Q3 2013

A Cushman & Wakefield Research Publication

MARKET/SUBMARKET STATISTICS FOR GRADE A OFFICES

MARKET/SUBMARKET

CITY

OVERALL VACANCY RATE %

(3Q13)

OVERALL VACANCY RATE %

(2Q13)

OVERALL VACANCY RATE %

(3Q12)

UNDER CONSTRUCTION
(SF)

YTD CONSTRUCTION
COMPLETIONS (SF)

Australia

Adelaide

9.90

6.40

3.35

578,861

607,762

Australia

Brisbane

8.80

7.30

6.32

2,051,556

502,427

Australia

Melbourne

8.90

5.80

3.90

1,914,586

2,037,079

Australia

Perth

6.30

5.40

3.99

1,295,016

27,052

Australia

Sydney

10.20

7.40

7.49

3,578,975

495,333

China

Beijing

5.20

4.20

6.80

5,485,630

526,986

China

Chengdu

31.80

31.90

41.30

20,104,576

2,162,919

China

Guangzhou

15.68

17.30

12.00

24,443,592

4,970,407

China

Shanghai

5.60

6.18

5.42

14,268,744

556,515

China

Shenzhen

10.37

12.16

10.20

35,990,491

2,786,980

China

Hong Kong

5.02

4.62

3.90

5,341,085

867,411

India

Ahmedabad

31.30

33.00

20.70

5,649,700

866,455

India

Bengaluru

12.40

12.30

13.26

22,634,394

4,260,320

India

Chennai

18.10

19.90

19.19

4,150,365

3,203,837

India

Hyderabad

12.60

12.60

18.22

12,148,710

632,032

India

Kolkata

28.10

27.70

22.30

9,169,500

1,172,600

India

Mumbai

20.20

22.10

20.10

27,843,688

3,794,343

India

NCR

27.20

28.50

25.25

25,798,233

4,983,871

India

Pune

23.30

22.05

21.55

9,274,749

3,022,385

Indonesia

Jakarta

9.27

9.28

8.95

11,110,508

2,032,226

Japan

Tokyo

3.91

3.90

4.08

10,139,120

3,739,476

Malaysia

Kuala Lumpur

19.90

21.00

19.50

15,288,387

Philippines

Manila

4.29

5.08

7.45

544,653

3,719,852

Singapore

Singapore

5.47

3.70

6.80

6,141,129

784,100

South Korea

Seoul

13.80

14.50

7.90

6,715,442

4,176,796

Taiwan

Taipei

9.46

9.44

9.35

3,485,915

337,500

Thailand

Bangkok

11.79

12.14

16.68

478,820

Vietnam

Hanoi

23.00

25.00

25.00

2,204,522

278,710

Vietnam

Ho Chi Minh City

16.80

16.40

12.00

2,772,781

251,875

NOVEMBER 2013

A Cushman & Wakefield Research Publication

LOCAL CURRENCY USD*

MARKET/SUBMARKET

CITY

MEASUREMENT

GRADE A
OCCUPANCY COST

Q-O-Q CHANGE
IN RENTS

Y-O-Y CHANGE
IN RENTS

GRADE A
OCCUPANCY COST

Q-O-Q CHANGE
IN RENTS

Y-O-Y CHANGE
IN RENTS

Australia

Adelaide

Australia

AUD/sq.m./yr

500

0.00%

0.00%

4.12

15.81%

1.69%

Australia

Brisbane

AUD/sq.m./yr

655

0.00%

-5.76%

5.39

15.81%

-4.16%

Australia

Melbourne

AUD/sq.m./yr

624

0.00%

-2.95%

5.14

15.81%

-1.31%

Australia

Perth

AUD/sq.m./yr

810

0.00%

0.00%

6.67

15.81%

1.69%

China

Sydney

AUD/sq.m./yr

875

0.00%

2.94%

7.21

15.81%

4.69%

China

Beijing

RMB/sq.m./mo

554.90

-0.48%

-3.02%

8.42

-0.23%

-0.08%

China

Chengdu

RMB/sq.m./mo

174.00

-2.30%

-8.08%

2.64

-2.05%

-5.29%

China

Guangzhou

RMB/sq.m./mo

284.12

-0.95%

6.25%

4.31

-0.70%

9.47%

China

Shanghai

RMB/sq.m./mo

457.18

1.55%

-3.29%

6.94

1.81%

-0.36%

Shenzhen

RMB/sq.m./mo

327.33

1.14%

-1.03%

4.97

1.40%

1.97%

China

Hong Kong

HK$/sf/mo

86.39

0.61%

3.71%

11.14

0.66%

3.71%

India

Ahmedabad

INR/sf/mo

37.26

-2.87%

-4.46%

0.60

-7.80%

-18.20%

India

Bengaluru

INR/sf/mo

57.79

-1.62%

9.78%

0.93

-6.61%

-6.01%

India

Chennai

INR/sf/mo

46.81

0.65%

6.39%

0.75

-4.46%

-8.91%

India

Hyderabad

INR/sf/mo

44.51

0.47%

7.25%

0.71

-4.63%

-8.17%

India

Kolkata

INR/sf/mo

64.10

1.28%

1.15%

1.03

-3.86%

-13.40%

India

Mumbai - CBD

INR/sf/mo

284.44

0.00%

0.15%

4.56

-5.08%

-14.25%

India

Mumbai - SBD

INR/sf/mo

299.92

0.00%

1.67%

4.80

-5.08%

-12.95%

India

Delhi - CBD

INR/sf/mo

423.33

-6.84%

3.76%

6.78

-11.57%

-11.16%

India

Gurgaon - CBD

INR/sf/mo

107.99

1.03%

12.49%

1.73

-4.10%

-3.69%

India

Pune

INR/sf/mo

57.74

9.40%

13.77%

0.92

3.84%

-2.59%

Indonesia

Jakarta

Rp/sq.m./mo

421,803

8.65%

53.15%

3.53

-2.75%

31.62%

Japan

Tokyo

JPY/tsubo/mo

25,500

2.00%

2.00%

7.26

1.02%

-19.28%

Malaysia

Kuala Lumpur

RM/sf/mo

8.39

-0.24%

12.62%

2.63

0.20%

7.70%

Philippines

Manila

PHP/sq.m./mo

858

3.13%

8.06%

1.84

4.31%

6.09%

Singapore

Singapore

S$/sf/mo

9.28

2.77%

1.64%

7.46

5.41%

0.25%

South Korea

Seoul

KRW/sq.m./mo

40,328

5.98%

3.10%

3.49

11.21%

7.42%

Taiwan

Taipei

NT$/ping/mo

4,628

0.22%

19.83%

4.38

1.74%

18.51%

Thailand

Bangkok

THB/sq.m./mo

774.48

0.15%

6.60%

2.31

0.19%

8.70%

Vietnam

Hanoi

VND/sq.m./mo

664,020

-0.50%

1.09%

2.93

-0.65%

-0.08%

Vietnam

Ho Chi Minh City

VND/sq.m./mo

960,000

-4.67%

-6.32%

4.23

-4.81%

-7.40%

* in psf per month

China, Hong Kong, Indonesia, Malaysia and Singapore reflect achievable rents. All other countries are based on asking rates.

OFFICE SNAPSHOT
Q3 2013

A Cushman & Wakefield Research Publication

MARKET HIGHLIGHTS
SIGNIFICANT 3Q13 LEASE TRANSACTIONS
COUNTRY

CITY

BUILDING

SUBMARKET

TENANT

SF

BUILDING CLASS

India

Chennai

SP Info City Block II

SuburbanPerungudiTaramani

Amazon

645,000

India

Bengaluru

Bagmane Constellation
Business Park (Phoenix
Block)

Outer Ring Road

Samsung

354,400

India

Pune

Business Bay Phase I

Off CBD - II

Deutsche Bank

350,000

Malaysia

Kuala Lumpur

Integra Tower

KL CBD

Aker Solutions

200,000

India

Chennai

DLF IT Park

Suburban- Guindy

L&T Infotech

189,000

China

Beijing

C&W

WJ

Honeywell

161,459

India

Pune

Ascendas (ITPP)

Peripheral - I

Synechron

150,000

India

Mumbai

Reliable Tech Park

Thane-Belapur Road

Clariant

130,000

China

Beijing

Putian building

WJ

HFEC

129,167

India

Bengaluru

Pritech Park

Outer Ring Road

Genpact

120,000

SIGNIFICANT 3Q13 SALE TRANSACTIONS

COUNTRY

CITY

BUILDING

SUBMARKET

BUYER

SF

Japan

Tokyo

Shiba Park BLDG.

Minato Ward

Asia Pacific Land

Limited, etc

South Korea

Seoul

Pine Avenue B

CBD

Koramco REITS &

Trust

691,301

437.62

Singapore

Singapore

Hewlett-Packard's premises on Alexandra Road

HarbourFront/
Alexandra

United Engineers

400,000

323.20

Japan

Tokyo

NBF Nihonbashi Muroma- Chuo Ward

chi Center BLDG.

Mitsui Fudosan

1,889,527

285.63

China

Beijing

The Exchange Beijing

CBD

Taiping Life
Insurance Co.,Ltd.

441,191

261.12

Japan

Tokyo

Tokyu Toranomon BLDG.

Minato Ward

Tokyu REIT

1,044,680

151.93

Taiwan

Taipei

Prince Construction
Neihu Project (En-bloc)

Neihu

Pro-Partner Ltd. &

Grape King Inc.

174,134

108.35

Malaysia

Kuala Lumpur

Jaya 33

Decentralized Area

Pelaburan Hartanah
Berhad (PHB)

450,000

101.60

Taiwan

Taipei

United WIN Enterprise

Headquarters

Neihu

HannStar

173,061

86.67

Hong Kong

Hong Kong

26/F, Exchange Tower

Kowloon East

N/A

27,440

39.47

11,272,677

PURCHASE PRICE
(US$ MILLION)

1,072.90

NOVEMBER 2013

A Cushman & Wakefield Research Publication

MARKET HIGHLIGHTS
SIGNIFICANT 3Q13 CONSTRUCTION COMPLETIONS
COUNTRY

CITY

BUILDING

SUBMARKET

MAJOR TENANT

South Korea

Seoul

FKI Bldg.

YBD

N/A

India

Pune

EON SEZ Cluster A

Suburban-East

China

Chengdu

Times 1

China

Chengdu

India

SF

COMPLETION DATE

1,815,665

Q3 2013

Barclays

960,000

Q3 2013

Dongdajie

N/A

953,251

Q3 2013

Palm Spring International Centre

Nanyanxian

N/A

807,293

Q3 2013

Pune

Business Bay Phase I

Off-CBD -II

Deutsche
Bank

800,000

Q3 2013

Singapore

Singapore

Asia Square Tower 2

Marina Bay

Allianz

784,100

Q3 2013

Philippines

Manila

Globe Telecom

Fort Bonifacio

Globe
Telecom

753,500

Q3 2013

India

NCR

DLF Building 14 D

Gurgaon

N/A

731,800

Q3 2013

India

Chennai

Ramanujan IT City Block T

(Littlewood Tower)

Suburban- Perungudi-Taramani

N/A

650,000

Q3 2013

India

Bengaluru

Bagmane World Technology Center

(Block 4)

Outer Ring Road

N/A

569,296

Q3 2013

SIGNIFICANT 3Q13 PROJECTS UNDER CONSTRUCTION

COUNTRY

CITY

BUILDING

SUBMARKET

MAJOR TENANT

South Korea

Seoul

Gran Seoul (Chungjin 12-16 District)

CBD

GS E&C

1,889,473

Q1 2014

Singapore

Singapore

Marina One

Marina Bay

N/A

1,875,610

2016

China

Shenzhen

Shenzhen Stock Exchange Center

Futian

N/A

1,824,104

Q4 2013

China

Guangzhou

Poly Klovy Plaza

PRNC

N/A

1,737,896

Q4 2013

China

Beijing

FFC

CBD

N/A

1,614,585

Q4 2013

Indonesia

Jakarta

Sahid Sudirman Center

Satrio - Mas Mansyur

N/A

1,506,946

Q4 2014

China

Chengdu

International Finance Square Tower 1

CBD

N/A

1,399,307

Q4 2013

India

Kolkata

Godrej Genesis

Sector V, Salt Lake

N/A

1,300,000

Q2 2014

China

Shenzhen

CNPEC Building

Futian

N/A

1,277,675

Q1 2014

China

Shanghai

Shanghai Arch

Hongqiao

N/A

1,184,029

Q4 2013

Renewal is not included in leasing activity statistics

SF

COMPLETION DATE

OFFICE SNAPSHOT
Q3 2013

A Cushman & Wakefield Research Publication

For more information about

C&W Research, contact:
Sigrid Zialcita
Managing Director, Research,
Asia Pacific
+(65) 6535 3232
[email protected]

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and represents clients on all aspects of property occupancy and investment, and has established a preeminent posi
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ing more than 16,000 professionals. It offers a complete range of services for all property types, including leasing,
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